Retail – the Big and the Small

Gone are those days when the Indian middle class was intimidated by supermarkets, departmental stores and mega marts. Supermarkets are no longer stereotyped as the ‘big, expensive stores’ in malls and posh areas where the rich shop, strutting around with their baskets and trolleys and where one cannot complain about the stones in the grain or negotiate the price. The common man now confidently walks into his nearest Big Apple, Reliance Fresh, Subhiksha, Food Bazaar etc. (an endless list…) for his daily grocery shopping, makes sure he avails every discount offer and walks out feeling happy and content. The emergence of the organized retail sector in India and its encroachment on the so-called prerogative of the local ‘kiranas’ has contributed greatly to the spurt in the rate of growth of the Indian retail sector. Organized retail is expected to form 10 per cent of total retailing by the end of this decade. Hypermarket is emerging as the most favorable format for the time being in India, which is getting a further push with the coming of multinationals. The question to be asked is whether this boom is necessarily a good thing. To answer this particular question, we must analyze the repercussions of the coming of organized retail in the form of supermarkets and hypermarkets.

Small traders and local banias definitely seem to be losing out on their business. The Indian customer, who earlier shared a one-to-one relationship with the local grocer and went from store to store for different items, now prefers the more organized form of shopping along with the convenience of finding everything under the same roof. The 40 million people employed in the unorganized retail sector certainly face a threat, particularly the illiterate and the old who cannot expect to find jobs in the ‘modern’ retail stores. Nevetheless, many ‘kiranas’ continue to survive as they retain tradition of credit.

The supply chain, on the other hand, seems to be undergoing a reformation under the present scenario. Poor farmers who have been deceived and cheated by middlemen for decades are now looking at interactions directly with big companies. Their economies of scale enable the companies to provide better facilities in terms of transportation and storage and the elimination of intermediaries ensures higher prices being paid to the farmers. The road ahead seems exciting enough with almost every big name in business announcing a retail venture.

The issue, however, still remains an open-ended one. Will the organized sector generate gains enough to compensate those who are losing out is a question which will be answered only in the times to come.

Vatsala Tibrewala

[Image Source:]